Most of us benefit from so-called 'loopholes'

EDITORIAL

October 07, 2011|BY PERK WASHENBERGER, Aberdeen

"I want you to tell your congressperson ... 'Prove you will fight as hard for tax cuts for workers and middle-class people as you do for oil companies and rich folks.'" Those words are from President Obama's Sept. 9 speech at the University of Richmond.

The president also told us that indeed his words aren't in any way class warfare but just plain math.

It seems to me that his words are a whole bunch about dividing the masses, and his not getting into the math of it all speaks volumes.

Let's look at some numbers.

Businessinsider.com documents 10 of the largest so-called loopholes that the politicians kick around in varying manners to lead us into their fold. I'm not an expert in what is a favorable or unfavorable tax code alteration, but a study of the current news was enlightening.

I was surprised to find that the cost of the Alcohol Fuel Credit is a loophole to some. According to this website, the five-year cost to the federal government to sustain the ethanol industry is $32 billion. If we consider the huge monetary impact the ethanol industry has in the Dakotas, surely a plurality of us wouldn't be in favor of the federal government abandoning this effort. As compared to the government's getting involved at all, this industry should have been charged with proving its viability in the market place at the outset. Alas, now the fiddler must be paid, and if not, many in the Dakotas will be hurt big time.

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Another so-called loophole - the exclusion (from income tax liability) of interest income from state and local bonds, which the aforementioned Internet site claims costs the government $59.8 billion over five years. This exclusion really doesn't cost the government anything. It simply means the feds don't get to tax this income in the first place.

The folks who prepared this study go on to say: Who benefits? Their answer - high-income investors and corporations. Really? Not our 401K retirement plans? That who-benefits notion is most assuredly a liberal/progressive's bent on the matter.

An example: Say the Aberdeen city wants to build a new water park, a new law enforcement building or whatever and pay for it with funds from a sale of bonds. If the rich folks and/or fund managers, etc. invest in these bonds, the interest income is excluded from federal income tax liability up to the limits of the alternative minimum tax. Why? The bonds will cost the local taxpayers (that's us) less because the interest rate charged will be lower if the investor won't have to pay federal income tax on some of the proceeds. When this type of exclusion was allowed by our lawmakers, the reasoning was the benefit garnered by the local taxpayers, not only in property taxes but by creating local jobs and amenities that benefit the community as a whole.

The progressive/liberal folks loudly bemoan what they call loopholes. Indeed, if we look closely at income tax exclusion efforts put in place by our elected representatives, we'll find in many cases the original rationale was how the exclusion benefited the masses in one way or another, including forging a compact among the poor, middle class and those in control of the necessary funds. It really could be looked at as the opposite of classism with everyone benefiting.

Our nation needs a leader who rejects the advocating of discriminatory economic attitudes (paying your fair share, whatever that is) and binds all of us together for the common good.

My accordion beckons ...

Perk Washenberger, Aberdeen, a retired real estate broker and business owner, now musically entertains people in senior living and care centers and at community events. Write to him at americannews@aberdeennews.com.